The tax filing status you choose may offer several options, or just one. If you qualify for several choices, it's wise to explore each one to see which offers you the biggest advantage to lower your taxes.
How To Choose A Tax Filing Status
Most taxpayers will only be able to qualify for one or two tax filing statuses. If you qualify for more than one, it is wise to explore which one offers you the biggest tax savings.
Factors that are influenced by the tax filing status you choose include, the amount you enter
for your standard deduction, the type of tax benefits you receive, and the amount of taxes you
have to pay.
Of the 5 tax filing status selections available, the 3 most commonly used ones are Single, Married Filing Jointly and Head of Household.
All 5 Tax Filing Status Choices Include:
- Single Tax Filing (as an Individual)
- Married Filing Separate (couples filing two separate returns)
- Married Filing Jointly (couples filing one single combined return)
- Head Of Household (for unmarried individuals that maintain a home for themselves and a qualified dependant)
- Qualifying Widow(er) with a Dependant (surviving spouse with a qualifying dependant child)
It is important to know that your tax brackets are influenced by the tax filing status you choose. This in turn will change the tax rates that are used to calculate your federal tax bill and the amount you owe.
Adjustments are made to your taxable income based on the filing status you select. Your selection will also determine the type of tax return form you will need to use to prepare your tax return. Your filing status is largely based on marital status and dependants.
How Your Filing Status Influences Your Choice For The Standard Deduction, Or Itemized Deduction
The standard deduction allows taxpayers to deduct a set amount to reduce your taxable income. It generally applies best to tax filers who do NOT have enough deductible expenses that they could get a better tax advantage by itemizing their deductions.
Itemizing deductions is always an option if the total amount of your deductions adds up to more than the standard deduction for your tax filing status choice.
The more deductible expenses you pay during the year, the more likely it will be more advantageous for you to itemize your tax deductions to gain bigger tax savings.
Facts That Influence Your Tax Filing Status Choice
- Your marital status on the last day of the year is for tax filing purposes your marital status for the entire year.
- Single tax filing status generally applies if you are unmarried, divorced, or legally separated according to your state law.
- Married couples may file a joint return. A surviving spouse may also file a joint return if their partner died during the year.
- Married couples may choose to file separate returns for better tax savings, or to separate from each others tax liability.
- The Head of Household tax filing status generally applies to single tax filers who have paid more than half the cost of maintaining a home for themselves and a qualifying person.
- The Qualifying Widow(er) with Dependent Child status may apply if a spouse died during the year, you have a dependent child, and other certain conditions are met.